A Necessary Evil: A Look at The OTAs - Hotelier Magazine - 0 views
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So, what’s the issue? For one, the whopping commissions the massive web-based entities take, routinely in the 20- to 30-per-cent range
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Hotels won’t give them any parameters at all, he points out, and a different pricing model will have to emerge. “They won’t necessarily take commission or such, but they might charge you just to drive people to your site. It’s a scary idea.
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The net result, says Estis Green, whose company conducts hotel data analytics, is that hotels can’t really compete on price alone anymore. It’s why, in today’s new reality, competition is a game played with other factors, including value-added services, rates based on multiple nights’ occupancy or other inspired — even desperate — offers devised by hoteliers.
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The ultimate trick to navigating the new landscape is for hoteliers to gain a better understanding of their customers, and to apply that knowledge in a way that’s mindful of the distribution channels that deliver them.
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Consider also the slew of limitations OTAs impose on their partner hotels regarding details such as the cutoff point at which unsold inventory is restored to the property for its own sales efforts. And their very presence irks a lot of hoteliers, who grumble that they’ve lost control of their own assets, a reality made even more bitter because they invited the snakes into their own meadow. “In my humble opinion,” sighs Jeff Froehlich, director of Sales and Marketing at Vancouver’s Shangri-La Hotel, “Hotels created the monsters that are OTAs.”
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Certainly OTAs are a high-cost channel, but every channel has fees, and the potential in any market is different based on those channels. An independent hotel on the beach is probably using an OTA more than a branded five-star urban hotel that has its own loyalty program.
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The optimal channel is one that leads directly to the hotel itself. The dollars spent by guests who book through a hotel’s website are pocketed by the hotel. To that end, operators might improve the look of their websites, include better content, post quality photos and generally ensure the site is superior to the competition. Additionally, they might spend some time contemplating value-adds: including free breakfasts, complimentary room upgrades and late check-ins. Loyalty programs also serve as powerful anchors for an increasing number of hotels. When someone buys a room through an OTA, he doesn’t enjoy the benefit of added points to his standings with the property.
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Online travel agents are evil, Froehlich says, but necessary. “There’s no point trying to put the monster back in the box.” And no one is disputing OTAs’ right to real estate in the hotel universe. The notion that OTAs have grown too big for their britches notwithstanding, says Le Saint Sulpice’s Di Re, doesn’t mean hoteliers are talking divorce. “We have no choice,” he shrugs, conceding the fact the online agents have massive marketing power. “You’re damned if you do, damned if you don’t.”